What Does Power Of Attorney Mean?
A power of attorney or POA allows you to grant someone the responsibility of acting legally on your behalf, whether you are incapacitated or not.
But what exactly is a power of attorney? What role does it play, what are the different types of power of attorney, and why are they important? We’ll also delve into how you can create or amend a power of attorney document, as well as some important considerations and risks to keep in mind.
Understanding Power of Attorney
To understand a power of attorney, it’s critical to understand some terminology first:
Power of Attorney: This is a legal document that gives you the ability to elect a certain person to act on your behalf.
Agent or Attorney-in-Fact: This is the person named under your power of attorney document who will make legal decisions for you.
Principal: This is you, the person in charge of naming someone your attorney-in-fact.
The Role of an Attorney-in-Fact
As the principal, you can decide just how much legal power your attorney-in-fact or agent will have over you. You can give them limited or comprehensive responsibility. They can be granted the right to make healthcare decisions, manage your finances, and/or sign contracts for you when you’re incapacitated.
Who Can Be Your Attorney-in-Fact?
While you can elect an actual attorney for this role, you can also give the role to a family member, close friend, co-worker, neighbor - or anyone else you trust, even if they don’t have a legal degree or background. You can also hire multiple agents if you wish.
As long as they meet certain basic requirements like being of legal age and not currently bankrupt, they can be your agent.
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Types of Power of Attorney
There are different types of power of attorney to consider:
General Power of Attorney: Gives your agent a broad range of responsibilities to carry out on your behalf, from legal proceedings to managing your finances
Limited or Special Power of Attorney: Only gives your agent authority over certain aspects, like managing your small business operations, your finances, or your medical decisions
Durable Power of Attorney: Immediately takes effect. Allows your agent to continue to act on your behalf if you’ve become incapacitated, like if you develop Alzheimer’s or fall into a coma. On the other hand, a non-durable power of attorney will end the power of your agent if you become incapacitated.
Springing Power of Attorney: Doesn’t immediately take effect. Gives your agent the power to act on your behalf only after certain conditions, like your incapacitation
The type of power of attorney you choose will greatly depend on your individual needs.
Why Power of Attorney is Important
Having a power of attorney in California is crucial. Your agent can play a significant role, giving you peace of mind and ultimately protecting you.
Depending on the type of power of attorney you choose, you can rest assured that your medical decisions will be made keeping your best interests in mind, your finances will be managed and bills will be paid on time, and you can potentially avoid conservatorship - which can otherwise be costly, time-consuming, and create a loss of autonomy.
Creating a Power of Attorney
When creating a power of attorney, there are a series of steps to take:
Pick an Agent: Choosing an agent or multiple agents to represent you is a big first step. Pick someone you trust, who you feel is responsible and capable of taking on the role, and who will have your best interests in mind.
Decide on a Type of POA: Pick between a general, limited or special, durable, or a springing power of attorney. This all comes down to your needs and the level of control you’d like your agent to have.
Draft the Document: Create a preliminary POA document that clearly states your agent and what powers you wish them to have. Drafting this with an estate planning attorney can ensure the best results.
Sign and Notarize: Your POA will need to be signed in front of a notary or in front of two witnesses. Otherwise, it won’t be considered a valid legal document, and your agent won’t have the authority to act for you.
Distribute Copies: Once your document has been signed, it’s time to distribute it. Give copies to your agent, healthcare professionals, financial institutions, and anyone else relevant. You should also keep a copy for yourself.
Electing the help of an estate planning attorney can ensure the process of creating a power of attorney will be quick and seamless.
Making Changes to Your Power of Attorney
If you decide you no longer want an agent to represent you or feel that your current agent is no longer suitable for the role, the good news is that you can make changes, as long as you have the capacity to do so.
To void a power of attorney, you’ll first need to create a revocation document. You’ll then need to notify all relevant parties of the revocation, including your agent. Lastly, collect and destroy all copies of your POA document as they are no longer valid or necessary.
If you wish to elect a new attorney-in-fact or restrict/expand the powers of your agent, you can create a new POA.
Considerations to Keep in Mind
It’s evident that a power of attorney can be useful. But with all good things come risks.
Sometimes the person we think will have our best interests in mind will end up abusing their power or using their authority to benefit themselves. They may also make poor decisions that wouldn’t adequately reflect what you would want. What is more, they may make mistakes that may not be noticed right away. It’s also possible that if you try to revoke their power, they may resist.
Keeping these risks in mind, it’s important to be careful about the person you name as your agent in your POA document. When in doubt, seek legal advice.
Conclusion
Having a trusted individual named as your attorney-in-fact under a power of attorney is vital. Just the peace of mind knowing that your wishes will be carried out for you makes having a power of attorney an essential part of the estate planning process.
You deserve to have this extra cushion of safety and security. Reach out to our team of estate planning experts today to get one-on-one assistance in creating a power of attorney.
Call (213) 835-0300 or schedule your free initial consultation. We’ll review your situation and help you determine the best next steps—no pressure, just answers.